Migration to Universal Credit should be halted to protect claimants says Usdaw

19th February, 2019

Shopworkers’ trade union Usdaw has responded to an inquiry by the Work & Pensions Select Committee, on ‘natural migration’ to Universal Credit (UC), with a call on the Government to halt the roll-out of UC and fundamentally rethink the policy to protect claimants.

Usdaw represents hundreds of thousands of workers in low paid industries and many members rely on one or more elements of in-work social security. Our recent survey found that, of those claiming in-work benefits, just 13% are currently in receipt of Universal Credit; therefore the migration process will have a substantial impact on the working people Usdaw represents.

Paddy Lillis, Usdaw General Secretary says:
“The Government must recognise that wages are not always enough to meet the cost of families’ outgoings and it is the responsibility of the state to support working people struggling to make ends meet. Usdaw is concerned the introduction of Universal Credit has become a Government cost cutting measure rather than providing real support for low paid workers and their families.

“The basic principle of Universal Credit ‘to make work pay’ has been undermined by a series of cuts: The introduction of the benefits cap, a freeze to working age benefits, the reduction of working allowances, plus the removal of the first child premium and two child limit for new claimants, mean a real cut in support for low-paid working claimants.

“The roll out of Universal Credit should be halted immediately, not slowed down as the Government has done, because that does not fix the problems that make many workers worse off. While we welcome the scaling back of managed migration, that does mean that more people will be ‘naturally’ migrated. So, as the select committee has identified, this will leave people worse off than if they had been moved through a managed process because they then don’t qualify for transitional protections.

“Despite the new Secretary of State recently acknowledging some of the problems with UC, the Government is still in denial and fiddling at the edges. The whole system needs a fundamental rethink and a reversal of the deeply damaging cuts.”

Alison Garnham, Chief Executive of Child Poverty Action Group said:
“It is all too clear from the cases coming in to our Early Warning System that Universal Credit isn’t fit for purpose. It is underfunded, administration is often poor and there are design flaws which leave families flummoxed when they try to work out how much – or how little – they will receive from one month to the next. Yet, in time, half our children will be in a household claiming Universal Credit. So, we have to get this right. The Work and Pensions Secretary has said she is listening to concerns. We are urging her to close Universal Credit to new claims until it can be shown that it will work with, rather than against, low earners trying to get on.”

Case studies below give examples of claimants who find themselves much worse off after ‘migrating’ to Universal Credit, and how the opaque system and poor advice can lead people to make decisions that end up costing them both financially and in personal terms.

Chris is currently a supermarket ‘team leader’, contracted 25 hours a week; however he always works additional hours, so his pay varies. He was advised he’d be better off on Universal Credit, but that turned out not to be true, particularly as Chris is paid four-weekly, not monthly, so has 13 paydays each year.

Last March/April he was paid twice during the assessment period, so he lost nearly £900 UC. In May the employer didn’t forward his payslip to the DWP, then submitted it alongside his June payslip, so he was deemed to have been paid twice again and lost nearly £900 again.

In total Chris lost nearly £1,800 in three months, because the Universal Credit system is not flexible enough to cope with weekly, fortnightly and four-weekly pay.

Lee migrated onto UC from tax credits after he moved in with his partner and her child. Following the move, he and his partner are worse off by around £200-£300 per month. Lee suffered an underpayment of £450 because of a clerical error by the DWP.

Lee eventually had to lodge a tribunal claim, at which point the DWP accepted their error and paid Lee the £450 owed to him, around 9 months after the underpayment. Lee was fortunate that he was in a position to be able to challenge this decision, but for many others the complexities of the system mean they are likely to give up.